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If we’re to talk about the balance of trade then we should talk about trade, not just trade in goods. Reducing a trade deficit through tough, smart negotiations is a way to increase net exports—and boost the rate of economic growth. Someone talking about the trade balance as a whole might still be wrong but they’re not being nonsensical. Whatever the trade deficit is, whether it’s important or not, it will always be the trade balance, not the balance only in goods, which is important or not. The question is important because America’s trade deficit in goods is large and persistent, about $2 billion every day.

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“If we start trying to reduce the trade deficit from one country, the goods will go through another country. Navarro singled out India for having “notoriously high” tariffs, and said the U.S. trade deficit with Germany will be among the toughest to tackle. On the campaign trail, Trump championed the idea of reducing the U.S. trade gap, promising to create millions of jobs by bringing back manufacturing positions from overseas. Navarro said the Trump administration wants to rebuild the American industrial base, reversing the decline in the nation’s manufacturing workforce. The U.S. is seeking more “reciprocal” trade with countries such as China and Germany in a bid to boost growth, reduce the trade deficit and keep American production capacity out of foreign hands, White House trade adviser Peter Navarro said.

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Trump Admin’s Peter Navarro Doesn’t Know Econ 101 About Trade

If we’re to talk about the balance of trade then we should talk about trade, not just trade in goods. Reducing a trade deficit through tough, smart negotiations is a way to increase net exports—and boost the rate of economic growth. Someone talking about the trade balance as a whole might still be wrong but they’re not being nonsensical. Whatever the trade deficit is, whether it’s important or not, it will always be the trade balance, not the balance only in goods, which is important or not. The question is important because America’s trade deficit in goods is large and persistent, about $2 billion every day.